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EXHIBIT 4.1
2000 EMPLOYEE PLAN
OF
PACIFICARE HEALTH SYSTEMS, INC.
The Company hereby adopts this 2000 Employee Plan of PacifiCare Health
Systems, Inc. (the "Plan") for the following purposes:
(1) To further the growth, development and financial success of
the Company by providing additional incentives to certain of its
employees and consultants who have been or will be given responsibility
for the management or administration of the Company's business affairs.
(2) To enable the Company to obtain and retain the services of
the type of personnel considered essential to the long-range success of
the Company by providing and offering them an opportunity to become
owners of capital stock.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
Section 1.1 - Act
"Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.2 - Award
"Award" shall mean a Non-Qualified Stock Option, a Stock Appreciation
Right, a Stock Payment, or any combination thereof, granted under the Plan.
Section 1.3 - Board
"Board" shall mean the Board of Directors of the Company.
Section 1.4 - Chief Financial Officer
"Chief Financial Officer" shall mean the Chief Financial Officer of the
Company.
Section 1.5 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
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Section 1.6 - Committee
"Committee" shall mean the Committee of the Board of Directors of the
Company as defined in Section 7.1 hereof.
Section 1.7 - Common Stock
"Common Stock" shall mean the Common Stock of the Company, par value
$.01 per share.
Section 1.8 - Company
"Company" shall mean PacifiCare Health Systems, Inc. or any successor
entity thereto.
Section 1.9 - Director
"Director" shall mean a member of the Board.
Section 1.10 - Disabled
"Disabled" shall mean a medically determinable physical or mental
impairment which has lasted or can be expected to last for a continuous period
of not less than 12 months and which renders the Participant substantially
unable to function as an Employee of the Company or a Subsidiary.
Section 1.11 - Employee
"Employee" shall mean any employee (as defined in accordance with the
Treasury Regulations and Revenue Rulings then applicable under Section 3401(c)
of the Code) of the Company, or of any corporation which is then a Subsidiary or
a consultant who is providing bona fide services to the Company or a Subsidiary,
whether such employee is so employed, or such consultant is retained, at the
time this Plan is adopted or becomes so employed or retained subsequent to the
adoption of this Plan.
Section 1.12 - Fair Market Value
The "Fair Market Value" of a share of the Company's Common Stock on the
date such determination is made shall mean: (i) the closing price of such share
on the principal exchange on which the shares of Common Stock are then trading,
if any, on such date, or, if shares of such stock were not traded on such date,
then on the next preceding trading day during which a sale occurred; or (ii) if
such stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, (1) the last
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sales price (if the stock is then listed as a National Market Issue under the
NASD National Market System), or (2) the mean between the closing representative
bid and asked prices (in all other cases) for the stock on such date as reported
by Nasdaq or such successor quotation system; or (iii) if such stock is not
publicly traded on an exchange and not quoted on Nasdaq or a successor quotation
system, the mean between the closing bid and asked prices for the stock on such
date as determined in good faith by the Committee; or (iv) if the Company's
Common Stock is not publicly traded, the fair market value established by the
Committee acting in good faith.
Section 1.13 - Nasdaq
"Nasdaq" shall mean the National Association of Securities Dealers Inc.
Automated Quotation System.
Section 1.14 - Officer
"Officer" shall mean a person who possesses the authority of an
"officer" as that term is used in Rule 4460 of the Rules of the National
Association of Securities Dealers, Inc. For purposes of this Plan, a person in
the position of "Senior Vice President" or higher shall be classified as an
"Officer" unless the Board or Committee expressly finds that such person does
not possess the authority of an "officer" as that term is used in Rule 4460 (i)
(1)(A) of the Rules of the National Association of Securities Dealers, Inc. For
purposes of this Plan, a person in the position of "Vice President" or lower
shall not be classified as an "Officer," unless the Board or Committee expressly
finds that such person possesses the authority of an "officer" as that term is
used in Rule 4460 (i) (1)(A) of the Rules of the National Association of
Securities Dealers, Inc.
Section 1.14 - Option
"Option" shall mean a non-qualified stock option to purchase shares of
the Common Stock of the Company, granted under the Plan.
Section 1.15 - Parent Corporation
"Parent Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if each of the corporations other than the
Company then owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
Section 1.16 - Participant
"Participant" shall mean an Employee who is selected by the Committee to
receive an award.
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Section 1.17 - Plan
"Plan" shall mean this 2000 Employee Plan of the Company.
Section 1.18 - Pronouns
The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.
Section 1.19 - Regulations
"Regulations" shall mean final, temporary or proposed regulations
promulgated under the Code.
Section 1.20 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.21 - Stock Appreciation Right
"Stock Appreciation Right" or "Right" shall mean a right granted
pursuant to Article VI of the Plan to receive an amount of cash or, in the
discretion of the Committee, a number of shares of Common Stock of the Company
or a combination of shares of Common Stock and cash, based on the increase in
the Fair Market Value of the shares of Common Stock subject to the right.
Section 1.22 - Stock Payment
"Stock Payment" shall mean a payment in shares of Common Stock: (i) to
replace all or any portion of the compensation, other than base salary, that
would otherwise become payable to a Participant in cash; (ii) to encourage
employment with the Company for employees; or (iii) other stock-based awards
that are valued in whole or in part based on the value of the Common Stock.
Section 1.23 - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.24 - Termination of Employment
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"Termination of Employment" shall mean: (i) the time when the
Participant ceases to be an Employee of the Company or a Subsidiary for any
reason, including, but not limited to, a termination by resignation, discharge,
death or retirement, and with respect to a Participant who is a consultant, the
time when such consultant is no longer retained by the Company or any Subsidiary
of the Company, but excluding terminations where there is a simultaneous
reemployment or reappointment of the Participant as an Employee or a consultant
by the Company or a Subsidiary; or (ii) with respect to a Participant who is an
Employee of a Subsidiary, the time when such Subsidiary ceases to be a
Subsidiary of the Company. The Committee, in its absolute discretion, shall
determine the effect of all other matters and questions relating to Termination
of Employment, including, but not limited to, the question of whether a
Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 - Shares Subject to Plan
The shares of stock subject to Awards shall be shares of the Company's
Common Stock. The aggregate number of such shares which may be subject to Awards
granted under the Plan shall be 1,500,000 shares of Common Stock, subject to
adjustment as provided herein. If any Award, expires or is terminated or
canceled without having been fully exercised, the number of shares subject to
such Award but as to which such Award was not exercised prior to its expiration
or cancellation may again be granted hereunder, subject to the limitations
contained herein. Not more than 50 percent of the Awards made under this Plan
shall be granted to Officers, including Vice Presidents, of the Company, except
for Awards to Officers not previously employed by the Company granted as an
inducement essential to such individuals entering into employment with the
Company or any corporation which is then a Subsidiary of the Company.
Section 2.2 - Changes in Company's Shares
In the event that the outstanding shares of Common Stock of the Company
are hereafter changed into or exchanged for a different number or kind of shares
or other securities of the Company, or (subject to Section 8.2 hereof) of
another corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, stock dividend or combination
of shares, or in the event of extraordinary cash or non-cash dividends being
declared with respect to outstanding shares of Common Stock or similar
transactions, proportionate adjustments shall be made by the Committee in the
number and kind of shares which are subject to Awards, including adjustments of
the limitations contained herein on the maximum number and kind of
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ARTICLE III
GRANTING OF AWARDS
shares which may be subject to Awards under the Plan.
Section 3.1 - Eligibility
Any Employee of the Company or of any corporation which is then a
Subsidiary shall be eligible to be granted Awards, except as otherwise provided
herein.
Section 3.2 - Stock Payments
The Committee may approve Stock Payments: (i) for all or any portion of
the compensation, other than base salary, that would otherwise become payable to
an Employee in cash; or (ii) as an incentive to employment with the Company.
Each Stock Payment will be evidenced by a written instrument signed by the
Participant or granted pursuant to a written performance plan adopted by the
Committee and may include any other terms and conditions consistent with the
Plan as the Committee may in its discretion determine.
Section 3.3 - Granting of Awards
(a) The Committee shall from time to time, in its absolute discretion:
(i) Select from the Employees (including those to whom Awards
have been previously granted under the Plan) such of them as in its
opinion should be granted Awards;
(ii) Determine the number of shares to be subject to such Awards
granted to such selected Employee, and determine whether such Awards are
to be Options, Stock Payments, Stock Appreciation Rights or any
combination thereof; and
(iii) Determine the terms and conditions of such Awards,
consistent with the Plan.
(b) Upon the selection of an Employee to be granted an Award, the
Committee shall, by resolution, set forth the terms and conditions of the Award
and instruct the Secretary or Chief Financial Officer to issue such Award. The
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to a Participant that the
Participant surrender for cancellation some or all of the unexercised Options
which have been previously granted to him. An Option, the grant of which is
conditioned upon such surrender, may have an option
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price lower (or higher) than the option price of the surrendered Option, may
cover the same (or a lesser or greater) number of shares as the surrendered
Option, may contain such other terms as the Committee deems appropriate and
shall be exercisable in accordance with its terms, without regard to the number
of shares, price, option period or any other term or condition of the
surrendered Non-Qualified Stock Option.
(c) Directors of the Company are not eligible to receive Awards under
this Plan.
ARTICLE IV
TERMS OF OPTIONS
Section 4.1 - Option Price
The exercise price per share of the shares subject to each Option shall
be set by the Committee; provided, however, that the exercise price per share
shall be not less than 100 percent of the Fair Market Value of such shares on
the date such Option is granted.
Section 4.2 - Commencement of Exercisability
(a) Except as the Committee may otherwise provide, no Option may be
exercised in whole or in part during the first year after such Award is granted.
(b) Subject to the provisions of Section 2.2, 4.2(a), 4.2(c) and 8.2,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the Committee shall provide in the terms of each
individual Option; provided, however, that by a resolution adopted after an
Option is granted the Committee may in its absolute discretion, on such terms
and conditions as it may determine to be appropriate and subject to Sections
4.2(a) and 4.2(c) accelerate the time at which such Option or any portion
thereof may be exercised
(c) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
Section 4.3 - Expiration of Options
The Committee shall provide, in the terms of each individual Option,
when such Option expires and becomes unexercisable; and (without limiting the
generality of the foregoing) the Committee may provide in the terms of
individual Options that said Options expire immediately upon a Termination of
Employment for any reason.
Section 4.4 - Employment of Participant
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Nothing in this Plan or in any Stock Option Agreement, Stock
Appreciation Right Agreement or in any written instrument or written performance
plan related to Stock Payments hereunder shall confer upon any Participant any
right to continue in the employ of, or be retained by the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the
Company and Subsidiaries, which are hereby expressly reserved, to discharge any
Participant, or to terminate the services of any consultant, at any time for any
reason whatsoever, with or without good cause.
ARTICLE V
EXERCISE OF AWARDS
Section 5.1 - Person Eligible to Exercise
During the lifetime of the Participant, only he, his guardian, legal
representative or other person approved by the Committee in its sole discretion
and described in the terms of the agreements documenting such Award may exercise
an Award granted to him, or any portion. After the death of the Participant, any
exercisable portion of an Award may, prior to the time when such portion becomes
unexercisable under Article IV or Section 8.2, be exercised by his personal
representative or by any person empowered to do so under the deceased
Participant's will or under the then applicable laws of descent and
distribution.
Section 5.2 - Partial Exercise
At any time and from time to time prior to the time when any exercisable
Award or exercisable portion thereof becomes unexercisable under Article IV or
Section 8.2, such Award or portion thereof may be exercised in whole or in part;
provided, however, that the Company shall not be required to issue fractional
shares and the Committee may, by the terms of the Award, require any partial
exercise to be with respect to a specified minimum number of shares.
Section 5.3 - Manner of Exercise
An exercisable Award, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or Chief Financial Officer or
their respective offices of all of the following prior to the time when such
Award or such portion becomes unexercisable under Section 4.3 or Section 8.2:
(a) Notice in writing by the Participant or other person then entitled
to exercise such Award or portion, stating that such Award or portion is
exercised, such notice complying with all applicable rules established by the
Committee;
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(b) (i) With respect to the exercise of Options, full payment (in cash
or by check) for the shares with respect to which such Option or portion
is thereby exercised;
(ii) With the consent of the Committee, shares of any of the
Company's Common Stock owned by the Participant either duly endorsed for
transfer to the Company or duly attested as to ownership with a Fair
Market Value (as determinable under Section 1.12) on the date of
delivery equal to the aggregate Option price of the shares with respect
to which such Option or portion is thereby exercised (which shares shall
be owned by the Participant for more than six months at the time they
are delivered);
(iii) With the consent of the Committee (and provided the use of
the following procedure by a Participant would not violate Rule 16(b)
under the Act), delivery to the Company of (x) irrevocable instructions
to deliver the stock certificates representing the shares for which the
Option is being exercised directly to a broker, and (y) instructions to
the broker to sell such shares and promptly deliver to the Company the
portion of the sole proceeds equal to the aggregate Option exercise
price;
(iv) With the consent of the Committee, any other form of
cashless exercise permitted under Section 5.4 hereof; or
(v) Any combination of the consideration provided in the
foregoing subsections (i), (ii), (iii) and (iv).
(c) Such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee may, in its
absolute discretion, also take whatever additional actions it deems appropriate
to effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer orders to transfer agents and
registrars; and
(d) In the event that the Award or portion thereof shall be exercised
pursuant to Section 5.1 by any person or persons other than the Participant,
appropriate proof of the right of such person or persons to exercise the Award
or portion thereof.
Section 5.4 - Cashless Exercise Procedures
The Company, in its sole discretion, may establish procedures whereby a
Participant, subject to the requirements of Rule 16b-3 under the Act, Regulation
T issued by the Board of Governors of the Federal Reserve System pursuant to the
Act, federal income tax laws, and other federal, state and local tax and
securities laws, can
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exercise an Option or a portion thereof without making a direct payment of the
Option price to the Company. If the Company so elects to establish a cashless
exercise program, the Company shall determine, in its sole discretion and from
time to time, such administrative procedures and policies as its deems
appropriate and such procedures and policies shall be binding on any participant
wishing to utilize the cashless exercise program.
Section 5.5 - Conditions to Issuance of Stock Certificates
The shares of stock issuable and deliverable upon the exercise of an
Award, or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the Company. The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Award or
portion thereof or upon a Stock Payment prior to fulfillment of all of the
following conditions:
(i) The admission of such shares to listing on all stock
exchanges on which such stock is then listed;
(ii) The completion of any registration or other qualification of
such shares under any state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary and advisable;
(iii) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable;
(iv) The payment to the Company of all amounts which it is
required to withhold under federal, state or local law in connection
with the exercise of the Award or grant of a Stock Payment; and
(v) The lapse of such reasonable period of time following the
exercise of the Award as the Committee may establish from time to time
for reasons of administrative convenience.
Section 5.6 - Rights as Stockholders
The holders of Awards shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares receivable
upon the exercise of any part of an Award unless and until certificates
representing such shares have been issued by the Company to such holders.
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Section 5.7 - Transfer Restrictions
The Committee, in its absolute discretion, may impose such restrictions
on the transferability of the shares receivable upon the exercise of an Award or
upon the grant of a Stock Payment, as it deems appropriate. Any such restriction
shall be set forth in the respective Stock Option Agreement or Stock
Appreciation Right Agreement and may be, and in the case of a Stock Payment will
be, referred to on the certificates evidencing such shares.
ARTICLE VI
STOCK APPRECIATION RIGHTS
Section 6.1 - Conditions to Grant of Rights
The Committee may approve the grant of Rights related or unrelated to
Options to Participants, subject to the following terms and conditions:
A Stock Appreciation Right may be granted: (i) at any time if unrelated
to an Option; or (ii) either at the time of grant, or at any time thereafter
during the option term if related to a Non-Qualified Stock Option.
Section 6.2 - Rights Granted in Connection with Options
(a) A Stock Appreciation Right granted in connection with an Option will
require the holder of the related Option, upon exercise of the Stock
Appreciation Right, to surrender such Option, or any portion thereof to the
extent unexercised, with respect to the number of shares as to which such Stock
Appreciation Right is exercised, and will entitle the holder to receive payment
of an amount computed pursuant to Section 6.2(c). Upon the exercise of a Stock
Appreciation Right, the number of shares subject to exercise under the related
Option shall be automatically reduced by the number of shares represented by the
Option or portion thereof surrendered. Upon the exercise of an Option, the
number of shares subject to the related Stock Appreciation Right shall be
automatically reduced by the number of shares with respect to which the Option
was exercised.
(b) Subject to Section 6.4(b) and (c), a Stock Appreciation Right
granted in connection with an Option hereunder will be exercisable at such time
or times, and only to the extent that a related Option is exercisable, and will
not be transferable except to the extent that such related Option may be
transferable. A Stock Appreciation Right granted in connection with an Incentive
Stock Option shall be exercisable only if the Fair Market Value of a share of
Common Stock of the Company on the date of exercise exceeds the purchase price
per share of Common Stock specified in the related Option.
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(c) Upon the exercise of a Stock Appreciation Right related to an
Option, the Option holder will be entitled to receive payment of an amount
determined by multiplying:
(i) The difference obtained by subtracting the purchase price of
a share of the Common Stock specified in the related Option from the
Fair Market Value of a share of the Common Stock on the date of exercise
of such Stock Appreciation Right, by
(ii) The number of shares of Common Stock as to which such Stock
Appreciation Right has been exercised.
Section 6.3 - Rights Granted Unrelated to Options
The Committee may grant Stock Appreciation Rights unrelated to Options
to Participants. The amount payable upon exercise of such a Stock Appreciation
Right shall be determined in accordance with Section 6.2(c), except that "Fair
Market Value of a share of Common Stock on the date of the grant of the Stock
Appreciation Right" shall be substituted for "purchase price of a share of the
Common Stock specified in the related Option."
Section 6.4 - Form of Payment; Conditions
(a) Payment of the amount determined under Sections 6.2(c) or 6.3 shall
be made solely in cash or alternatively, at the sole discretion of the
Committee, may be made solely in whole shares of Common Stock in a number
determined at their Fair Market Value on the date of exercise of the Stock
Appreciation Right, or in a combination of cash and shares as the Committee
deems advisable. If the Committee decides to make full payment in shares of
Common Stock, and the amount payable results in a fractional share, payment for
the fractional share will be made in cash.
(b) The Committee may, at the time a Stock Appreciation Right is
granted, impose such conditions on the exercise of the Stock Appreciation Right
as may be required to satisfy the requirements of Rule 16b-3 under the Act (or
any other comparable provisions in effect at the time or times in question).
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ARTICLE VII
ADMINISTRATION
Section 7.1 - Duties and Powers of Committee
(a) The Plan shall be administered by a committee of the Board
consisting of two or more members of the Board, selected by the Board, all of
which members will be both a "Non-Employee Director" as defined in Rule
16b-3(b)(3) (or any successor provision) promulgated under the Act, and an
"Outside Director" as defined for purposes of Section 162(m) (or any successor
provision) of the Code and the Regulations promulgated thereunder. It shall be
the duty of the Committee to conduct the general administration of the Plan in
accordance with its provisions. The Committee shall have the power to interpret
the Plan and the Awards and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. The Committee shall in its absolute
discretion determine whether to grant Options, Stock Payments and/or Stock
Appreciation Rights.
(b) No Award granted hereunder shall be exercisable unless and until
evidenced by a written Stock Option Agreement, Stock Appreciation Right
Agreement or a written instrument related to a Stock Payment, if applicable,
which shall be executed by the participant and an authorized Officer of the
Company and which shall contain such terms and conditions as the Committee shall
determine, consistent with the Plan. Each such agreement shall expressly
incorporate by reference the provisions of this Plan (a copy of which shall be
made available for inspection by the Participant during normal business hours at
the principal office of the Company) and shall state that in the event of any
inconsistency between the provisions hereof and the provisions of such
agreement, the provisions of this Plan shall govern.
Section 7.2 - Majority Rule
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instruments signed by a majority of the Committee.
Section 7.3 - Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall not receive compensation for their
services as members but all expenses and liabilities they incur in connection
with the administration of the Plan shall be borne by the Company. The Committee
may, with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
Officers and Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken
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and all interpretations and determinations made by the Committee in good faith
shall be final and binding upon all Participants, the Company and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Options and all members of the Committee shall be fully
protected by the Company in respect to any such action, determination or
interpretation.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 - Adjustments in Outstanding Awards
In the event that the outstanding shares of the stock subject to Rights
or Options are changed into or exchanged for a different number or kind of
shares of the Company or other securities of the Company or (subject to Section
8.2 hereof) of another corporation by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split, stock dividend
or combination of shares, or in the event of extraordinary cash or non-cash
dividends being declared with respect to outstanding shares of Common Stock or
similar transactions, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which all outstanding Rights
or Options, or portions thereof then unexercised, shall be exercisable, to the
end that after such event the Participant's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in an
outstanding Right or Option or the unexercised portion of the Right or Option
(except for any change in the aggregate price resulting from rounding-off of
share quantities or prices) and with any necessary corresponding adjustment in
the exercise price per share (or, with respect to Rights granted without
Options, the Fair Market Value per share on the date the Right was granted).
Section 8.2 - Merger, Consolidation, Acquisition, Liquidation or Dissolution
a. Notwithstanding anything to the contrary in Section 4.2(a), Section
4.2(b) or any vesting provisions of any Award, any Award outstanding under the
Plan which has been held for at least six months shall become exercisable
immediately upon the effective date of a "Change of Control." As used in this
Section 8.2, the term "Change of Control" shall mean the occurrence of any of
the following: (i) a business combination effectuated through the merger or
consolidation of the Company with or into another entity where the Company is
not the Surviving Organization; (ii) any business combination effectuated
through the merger or consolidation of the Company with or into another entity
where the Company is the Surviving Organization and such business combination
occurred with an entity whose market capitalization prior to the transaction was
greater than 50 percent of the Company's market capitalization prior to the
transaction; (iii) the sale in a transaction or series of transactions of all or
substantially all of the Company's assets; (iv) any "person" or "group" (within
the
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meaning of Sections 13(d)and 14(d) of the Act) other than UniHealth, a
California non-profit public benefit corporation ("UniHealth"), acquires
beneficial ownership (within the meaning of Rule 13d-3 of the Act), directly or
indirectly, of 20 percent or more of the voting common stock of the Company and
the beneficial ownership of the voting common stock of the Company owned by
UniHealth at that date is less than or equal to the beneficial ownership
interest of voting securities attributable to such other person or group; (v) a
dissolution or liquidation of the Company; or (vi) the Company ceases to be
subject to the reporting requirements of the Act as a result of a "going private
transaction" (within the meaning of the Act). For purposes hereof, "Surviving
Organization" shall mean any entity where the majority of the members of such
entity's board of directors are persons who were members of the Company's board
of directors prior to the merger, consolidation or other business combination
and the senior management of the surviving entity includes all of the
individuals who were the Company's executive management (the Company's chief
executive officer and those individuals who report directly to the Company's
chief executive officer) prior to the merger, consolidation or other business
combination and such individuals are in at least comparable positions with such
entity
b. The Committee may make such determinations and interpretations and
adopt such rules and conditions as it, in its absolute discretion, deems
appropriate in connection with a Change in Control and acceleration of
exercisability. All such determinations and interpretations by the Committee
shall be conclusive.
c. Each Participant shall receive at least 10 days' notice prior to the
effective date of the Change of Control that their Awards will be exercisable
upon the effective date of the Change of Control and the officers of the Company
shall make adequate provisions to permit all Participants to exercise their
Awards as of the effective date of the Change of Control.
Section 8.3 - Awards Not Transferable
No Award or interest or right therein or part thereof, excluding Stock
Payments, shall be liable for the debts, contracts or engagements of the
Participant or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing in this
Section 8.3 shall prevent transfers by will or by the applicable laws of descent
and distribution or by other methods to any approved person pursuant to Section
5.1.
Section 8.4 - Withholding Tax Liability
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(a) A holder of an Award granted hereunder may elect to deliver shares
to the Company or have the Company withhold shares otherwise issuable upon the
exercise of an Award in order to satisfy federal and state withholding tax
liability (a "share withholding election"), provided: (i) the Board or, if so
designated, the Committee, shall not have revoked its advance approval of the
holder's share withholding election; and (ii) the share withholding election is
made on or prior to the date on which the amount of withholding tax liability is
determined (the "Tax Date"). Notwithstanding the foregoing, a holder whose
transactions in Common Stock are subject to Section 16(b) of the Act may make a
share withholding election only if the following additional conditions are met:
(i) the withholding is made at least six months after the date of the grant of
the Award; and (ii) either (x) the share withholding election is irrevocably
made at least six months in advance of the withholding, or (y) the share
withholding election and the share withholding take place during the period
beginning on the third business day following the date of release of the
Company's quarterly or annual financial results and ending on the twelfth
business day following such date.
(b) A share withholding election shall be deemed made when written
notice of such election, signed by the holder of the Award, has been delivered
or transmitted by registered or certified mail to the Secretary or Chief
Financial Officer of the Company at its then principal office. Delivery of said
notice shall constitute an irrevocable election to have shares withheld.
(c) Upon exercise of an Award by a holder, the Company shall transfer
the total number of shares of Common Stock of the Company subject to the Award
to the holder on the date of exercise, less any shares the holder elects to
withhold.
Section 8.5 - Amendment, Suspension or Termination of the Plan
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board. Neither
the amendment, suspension nor termination of the Plan shall, without the consent
of the holder of the Award, impair any rights or obligations under any Award
heretofore granted. No Award may be granted during any period of suspension nor
after termination of the Plan, and in no event may any Award be granted under
this Plan after the expiration of ten years from the date of this Plan. The
Committee may amend or otherwise modify any Award (either individually or as a
group) from time to time, but no amendment or modification shall, without the
consent of the holder of such Award, impair any rights or obligations of such
award.
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Section 8.6 - Effect of Plan Upon Other Incentive and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plan in effect for the Company or any Subsidiary. Nothing in this Plan
shall be construed to limit the right of the Company or any Subsidiary:
(i) to establish any other forms of incentives or compensation
for Employees of the Company or any Subsidiary; or
(ii) to grant or assume Awards otherwise than under this Plan in
connection with any proper corporate purpose, including, but not limited
to, the grant or assumption of options or stock appreciation rights in
connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
Section 8.7 - Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of the Plan.
Section 8.8 - Effective Date of The Plan
This effective date of this plan shall be June 19, 2000 and shall remain
in effect until June 30, 2001.
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